World Bank provides USD 500 mln loan for Ukrainian reforms

The World Bank approved a USD 500 mln loan to finance the second multi-sector development policy operation in Ukraine, according to its press release released on Aug. 25. This new financing supports a number of high-priority structural and macroeconomic reforms to improve the country’s public sector governance, business environment, energy and social assistance.

“The package of reforms supported by this operation will help address the deep-rooted structural problems that have contributed to Ukraine’s current economic crisis,” said Qimiao Fan, World Bank Country Director for Belarus, Moldova, and Ukraine. “We are helping Ukraine to implement an urgent set of measures, which will be essential to stabilize the economy, provide quality services to all Ukrainians and return the country to a sustainable growth path,” stated the World Bank official.

Reform measures supported by this loan will promote good governance, transparency, and accountability in the public sector, the press release said. The operation will support efforts to strengthen the regulatory framework and reduce the cost of doing business. This should help unleash private enterprise and create sustainable and high-quality jobs for Ukrainians. Also, this loan will assist the authorities to continue reforming inefficient and inequitable utility subsidies while protecting the poor from rate increases by strengthening social assistance.

This operation is part of the World Bank Group’s broader financial support package announced in February this year, which aims to provide Ukraine with up to USD 2 bln in 2015. The first multi-sector development policy loan worth USD 750 mln was disbursed in May 2014.

Alexander Paraschiy: Continued cooperation with IFIs and more foreign currency inflow is positive for Ukraine. In fact, this money had been envisaged in the IMF program's financing plan. It's worth keeping in mind however that World Bank money is designated as special purpose funds, which could be used only for predefined tasks and under very specific procedures. In other words, it will not enter the economy immediately and its use could be limited and delayed in time.

Nevertheless, the loan will have a positive effect on gross international reserves since the funds will be allocated for state accounts. Given the debt restructuring deal disclosed yesterday and ongoing IFI cooperation, we anticipate gross international reserves growing to USD 15.7 bln by the end of the year.

Источник: Конкорд Капитал